Kern Corporation's 5-Year Bonds Yield 7

question 81

Multiple Choice

Kern Corporation's 5-year bonds yield 7.30% and 5-year T-bonds yield 4.10%.The real risk-free rate is r* = 2.5%,the default risk premium for Kern's bonds is DRP = 1.90% versus zero for T-bonds,the liquidity premium on Kern's bonds is LP = 1.3%,and the maturity risk premium for all bonds is found with the formula MRP = (t − 1) × 0.1%,where t = number of years to maturity.What is the inflation premium (IP) on all 5-year bonds?

• A)1.20%
• B)1.32%
• C)1.45%
• D)1.60%
• E)1.68%

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Definitions:

Neurotransmitter Activity

The action or process by which neurotransmitters are released by neurons, bind to receptors, and transmit signals across synapses in the nervous system.

Structural Defects

Faults or imperfections in the construction or composition of something, which may affect its strength, function, or aesthetics.

Oxytocin

A hormone and neurotransmitter involved in childbirth and lactation, also associated with empathy, trust, sexual activity, and relationship-building.

Pair-Bonding

The establishment of a sustained social and emotional relationship between two individuals, often involving mutual support and attachment.